AI-linked stocks fall after call for development slowdown worries investors – business live

The recent downturn in AI-linked stocks, particularly across Asian and European markets, underscores a growing tension between rapid technological advancement and calls for responsible development. The catalyst for this market reaction was the appeal from Anthropic CEO Dario Amodei, who warned against 'reckless' AI development and suggested that a swarm of AI agents could cause billions in damages by 'taking over the entire internet.' This sentiment was quickly echoed by industry titans Sam Altman and Elon Musk, lending significant weight to the argument for a more cautious approach.

Dario Amodei's Appeal

Amodei's public call for a slowdown in AI development, grounded in safety concerns, has directly impacted investor confidence. His warnings about the potential for AI agents to cause widespread damage, while disputed by some experts, have been taken seriously by the markets. This has led to a re-evaluation of the aggressive growth projections that have fueled the AI boom, particularly concerning the substantial infrastructure investments required for data centers.

Investors are now pricing in a scenario where the pace of AI innovation might not be as relentless as previously assumed. This shift in perception directly affects companies that have seen their valuations soar based on anticipated exponential growth. The market's reaction highlights how deeply intertwined investor sentiment is with the public statements and perceived intentions of key industry leaders, especially when those statements touch upon fundamental safety and ethical considerations.

SK Hynix and SoftBank

The market's apprehension was immediately reflected in the performance of major AI-linked companies. South Korea's KOSPI index dropped significantly, with chipmaker SK Hynix plummeting by 5.75%. SoftBank, a prominent AI investor, saw its shares fall by as much as 13% in Tokyo, partly due to OpenAI CEO Sam Altman's announcement that the ChatGPT-maker would not go public this year. Taiwan Semiconductor Manufacturing Company also experienced a decline.

In Europe, the Stoxx Europe 600 Technology index hit a six-week low, with French semiconductor materials company Soitec dropping 12.8% and Germany's Aixtron falling 9.3%. These declines illustrate the broad-based impact of the slowdown calls, affecting not just the developers of AI models but also the crucial hardware and infrastructure providers that underpin the entire ecosystem. The interconnectedness of the global tech supply chain means that concerns originating from a few prominent voices can quickly ripple through international markets.

Ipek Ozkardeskaya's Warning

Ipek Ozkardeskaya, a senior analyst at Swissquote, articulated the core financial concern: the sustainability of AI infrastructure investments if development slows. She questioned who would bear the costs of leases, debt, and power commitments for data centers if the expected compute demand and revenue growth diminish. This scenario introduces significant credit risk, particularly for highly leveraged data-center operators and lenders who have financed projects based on aggressive assumptions about future AI demand.

Ozkardeskaya's analysis points to a critical vulnerability in the AI investment narrative, especially at a time when interest rates are expected to rise, increasing borrowing costs. The unique aspect of this slowdown, as noted, is that it originates from the developers themselves rather than a lack of capital or investor willingness. This internal call for caution suggests a more fundamental re-evaluation of the industry's trajectory, potentially leading to a more measured, but perhaps less profitable, path forward for the sector.